Europe PE tight supply putting more pressure on buyers

LONDON (ICIS)--Tight polyethylene (PE) supply
for some grades in Europe is leading to
stronger pressure on buyers for April pricing.

LDPE, LLDPE tighter

Production issues affect
supply

Naphtha stronger

Last week, Dow
stopped all new orders for April, adding a
supplement of €70/tonne, compared to March
business.

Other sellers are still talking of plus
€50/tonne for end-month retroactive business.

Buyers’ early expectations for April
settlements were at €30/tonne increase.

In some cases, this is still the case, but low
density polyethylene (LDPE) and linear low
density polyethylene (LLDPE) have been but
tightening due to some production issues and
fewer imports, leading to stronger targets from
some producers.

“At the end of April we will have to pay more
than 30 [€/tonne increase],” said one buyer.

“We are fighting with the suppliers. 30
[€/tonne increase] is a given.”

LyondellBasell’s unplanned outage of its
320,000 tonne/year plant in Aubette, France, at
the Berre complex, has exerted pressure.

A couple of unplanned cracker issues in Germany
and Italy have also led to some tightening,
according to buyers, but these issues have not
been confirmed with the producers concerned.

In the C4 LLDPE market, supply is tightening
due to lower imports.

Some buyers have been informed they will not be
getting their full expected supply in April,
and also May.

Middle Eastern supply was less available and,
meanwhile, US imports were also less in
evidence, although sources questioned how long
this scenario would last, with substantial new
capacity coming on stream.

Higher naphtha prices were also putting
pressure on buyers for May, as naphtha is a
driver for ethylene and subsequently PE prices.

Few sources expected this situation to last
long.

Unplanned production issues would be resolved,
the planned cracker outages that are expected
to affect PE output would be over, and higher
prices in Europe would attract more imports.

But there was some expectation of tightness in
May at least.

High density polyethylene (HDPE) has not been
affected as much, and here netbacks have been
better for European producers than on LDPE and
LLDPE.

End-month settlements are not expected to be
done soon, and the new May ethylene contract is
likely to settle before PE is finally settled
for April.

-

PE is used in packaging, the manufacture of
household goods, and also in the agricultural
sector.

Picture source: Kurt
Amthor/imageBROKER/REX/Shutterstock

Focus article by Linda Naylor

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